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Level 2
February 7, 2020
Question

Total Basis affecting my refund amount

  • February 7, 2020
  • 2 replies
  • 20 views

I have a cost basis for my IRA that started in the 90's because I was advised a contribution would be deductible, but after arguing with IRS it was not. So I paid taxes on $2,000 that remained in my IRA. I'm seeing now this should be recorded on Form 8606 and I have entered it in TT before however, I'm not seeing it now. When I enter the 2,000 as my Total basis as of December 31, 2018, my refund amount goes up. I don't understand why this is affecting my refund. I only want to track what I've paid taxes on so that I don't pay taxes on that amount when I withdraw. Why is my refund number changing now?

    2 replies

    Level 2
    February 8, 2020

    I may be answering my own question. I think what is happening is the total basis is being taken out of a conversion amount that I'm taking from IRA to Roth. So I'm paying taxes on the conversion amount less the 2,000. Is that right?

    MaryK4
    Level 15
    February 8, 2020

    Yes that is correct- since you already paid the tax on the $2000 you only pay on the earnings now. @markallisonmc

     

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